I have seen posts or heard a lot of people state how the economy is still not very good (and it isnt) and that they are frustrated by this. Some blame Obama, some blame Bush, and some blame the left wing or right wing in general. However, none of these are even close to the main reason the global economy (not just the US) is not in good shape. Back in the early 2000s oil was around $20 a barrel. The global economy as a whole always grew fairly well on cheap oil unless there was some major bank issue involved such as in the great depression. When the economy tanked in 2008 there was a major bank issue. Home loans were made that should not have been in massive amounts and when they started to default several banks crashed. The thing is, expensive oil exposed these bad loans more than anything else. Oil per barrel got up to $147 per barrel in 2008. Gas suddenly was expensive, food went up to to higher farming and transportation costs due to expensive oil. Fairly quickly people were spending much more on gas and food, among the many other things that oil is used with. This extra spent money helped many of the people default on their home loans. China during this time was demanding more and more oil as well as India which created more demand than oil they could truly pump out of the ground at cheap prices. Governments rely on growth (or GDP) to pay off their debt. The more their economies grow the more they can pay off their debts. GDP has always kept debts for economies in check. The more expensive oil is, the harder it is to have good GDP however. Since oil has become expensive governments worldwide are drowning in debt. In my opinion the main reason for this is expensive oil. There is no way to get lasting good GDP with expensive oil unless you have millions and millions of jobs being added each year like China has done recently. Now even China has started to hit a wall and their GDP is falling. In the end governments debts cannot go on forever with poor GDP and defaults happen, when defaults happen, banks collapse, when banks collapse, the entire system crashes. People are frustrated by America printing money but in fact many other countries have done the same since 2008 and would have completely crashed if they had not. These governments knew GDP or growth was actually contracting and so they printed money to try and spur growth that was becoming very very hard to do with expensive oil. Now America, Europe, and most of the world in general is in debt that they can in no way ever pay off and they cannot keep growing the debt forever, at some point the debt will default. My main point is that the entire world will have to move off oil at some point, and it will be very painful. Oil is finite, expensive, and such things as fracking, the tar sands, or deep well drilling are only happening because much of the easy and cheap oil is gone. In my opinion these things are just desperation moves to try to keep up with world demand that already is not happening. People and countries can only pay so much for oil too, the global economy will not be able to run on $200 a barrel oil in my opinion. Oil is also a major pollutant too that is bringing upon climate change. That problem also must be handled and the only way to is by using far less oil and coal. Is there a mass alternative for oil that will prop up a world economy of seven billion and growing? No, I do not think so. The human race is very close to hitting a limit to its growth. Food is expensive, fuel is expensive, power is getting more expensive, and people have less and less to spendi in the economy on other things. There cannot be infite growth on a finite planet. There cannot be infite use of oil when oil is finite. The writing is on the wall for the global economy in my opinion. The world has too many people wanting too much and at some point this bubble will burst. The industrial age will die and whoever survives will be in a much simpler society, and a much harsher one than now which would be much closer to the middle ages. I certainly hope I am wrong about this and I could be. Thinking of this sort of future weighs on me and can be very depressing to think about. I just know that things are not good and expensive oil is a major reason why. Human overpopulation in the end is the biggest problem of all though. Peak oil is not when the world runs out of oil, peak oil is when it is too expensive to run an economy on oil anymore. More and more, we are getting there. Debt cannot go on forever, and debt is pretty much all that is propping up the world at this point. Humanity consumes and consumes and rarely thinks of the long term consequences. Once we hit the wall, it most likely will be too late. I many times think the worst for the future but I hope for the best. I live each day like it is my last and no matter how tough things may get I will never give up. Change is coming, but hopefully there will still be a future for the kids growing up right now down the road that is worth living in. I know this was a long post but I really needed to vent about this. Next time you think about the economy being bad, think about expensive oil.
Posted on: Wed, 19 Mar 2014 23:35:12 +0000
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